The main investor focus this week will be the economic reports, which help shape expectations about the Federal Reserve’s July rates meeting. Although Powell as much as declared July’s rate hike, it is far from being a done deal, as there’s enough time for economic and financial surprises before the declaration date. That’s why the economic reports coming out between now and the Fed’s next meeting in July are extremely important: they will shape policymakers’ rate decisions down the road.
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Here are three economic events that could affect your portfolio this week. For a full listing of all upcoming economic events, check out the TipRanks Economic Calendar.
» Bank Stress Test Results – Wednesday, 06/28 – This report presents the outcome of a test, conducted by the Federal Reserve, which is aimed at determining banks’ resilience in different financial situations. The stress test is usually closely watched by analysts and investors, since its outcome determines the needed levels of liquidity and capital they should hold, which, in turn, affects how much money banks will have left over for dividends and stock buybacks. This year’s tests are especially important, because of the failures of three banks earlier this year. Now, the Fed will study the effects of rising interest rates on bank security portfolios. Therefore, the result of the test is likely to affect the stance of the Fed’s monetary policy to a certain extent since the banks are the core of the country’s financial stability.
» May’s Core Personal Consumption Expenditures (Core PCE) – Friday, 06/30 – Core PCE, published by the US Bureau of Economic Analysis, is an average amount of money that consumers spend in a month, excluding seasonally volatile products such as food and energy. FOMC policymakers use the annual Core PCE as their primary gauge of inflation. A stronger-than-expected reading could add to pressures on the Federal Reserve to further increase interest rates in a bid to quell inflation.
» June’s Michigan Consumer Sentiment Index – Friday, 06/30 – The index is the outcome of a survey of personal consumer confidence in economic activity, showing a picture of whether or not consumers are willing to spend money. Consumer exuberance can translate into greater spending and faster economic growth, implying a stronger labor market and a potential pick-up in inflation. Thus, a higher-than-expected reading may strengthen the Fed’s hawkish stance.
